- Cheap Living, Not Just Interest Rates, Determines Where US Personal Loans Go Furthest
North Dakota has emerged as the US state where a typical personal loan delivers the greatest purchasing power, highlighting how the real value of borrowing depends not only on interest rates but also on local living costs and household incomes.
A new study by digital personal finance company Achieve ranks North Dakota first with a 98.03-point buying-power score, followed by South Dakota at 96.14 and Iowa at 95.89.
The analysis examined all 50 US states using the national average personal loan of US$11,699, adjusting that amount for regional prices and then comparing local borrowing costs and the size of a typical loan relative to annual household income.
The result is an unusually revealing look at American consumer credit: the same nominal loan can have substantially different economic value depending on where the borrower lives.
In North Dakota, for example, the purchasing power of a US$11,699 loan rises to the equivalent of US$13,261 after adjusting for local prices. The state’s regional price parity of 89 indicates that everyday costs are roughly 11.00% below the national benchmark.
North Dakota also combines those lower prices with an average offered annual percentage rate of 24.08%, according to Achieve, while the typical loan is equivalent to about 15.00% of annual household income.
That combination pushed the state to the top of the ranking. South Dakota follows closely. Its regional price parity is also 89, meaning the same national-average personal loan has purchasing power equivalent to approximately US$13,186 locally. The state’s average offered APR is about 24.00%, while the average loan represents roughly 16.00% of annual income.
Iowa ranks third and provides perhaps the clearest illustration of why interest rates still matter.
Its average offered APR of 19.23% is the lowest among the five highest-ranked states highlighted by Achieve. Combined with prices roughly 12.00% below the national average, the US$11,699 benchmark loan delivers real purchasing power of about US$13,083.
The typical loan represents about 16.00% of annual household income.
But the ranking also exposes an important distinction between borrowing power and cheap borrowing.
Arkansas ranks fourth with a score of 89.71 because living costs are approximately 13.00% below the national level, giving the benchmark loan a real value of about US$13,691 — the highest among the top 10 states.
Yet its average offered APR is about 36.00%, considerably above rates in North Dakota, South Dakota and Iowa.
The state ranks fifth with an 87.70 score and offers the equivalent of US$13,256 in purchasing power from the average US$11,699 loan. But the average offered APR stands at approximately 42.78%.
That is a reminder that a high position on a purchasing-power index should not automatically be interpreted as evidence that personal loans are inexpensive.
A borrower may obtain greater real purchasing power because housing, groceries and services cost less locally, while still paying a substantial price for the credit itself.
Illinois illustrates the opposite side of the equation. Its regional price parity is 100, broadly in line with the national price level, giving an average loan real purchasing power of US$12,982 in Achieve’s calculations.
Yet Illinois ranks sixth because its average offered APR is relatively lower at 24.00%, while the average loan equals just 14.00% of annual income one of the lowest debt-to-income measures among the leading states.
Minnesota, which ranks tenth overall, also records a 14.00% loan-to-income ratio despite a higher average APR of 35.00%.
Georgia ranks ninth, helped by an average APR of about 26.00%, while Oklahoma and Nebraska benefit from lower living costs despite average offered rates of 41.00% and 39.00%, respectively.
The findings arrive as personal borrowing becomes increasingly embedded in US household finances.
Achieve says nearly 40.00% of American adults now use personal loans to pursue financial goals, reflecting a broader shift in which unsecured credit is being used not only for emergencies or debt consolidation but increasingly for major purchases, home improvements and other planned expenditures.
A fixed US$11,699 loan does not buy the same quantity of goods and services in every state. Borrowers living in lower-cost regions effectively receive greater consumption capacity from every dollar borrowed.
But the advantage disappears quickly if high interest charges significantly increase the amount eventually repaid.
The central question for consumers is therefore not simply “How much can I borrow?” but “What will this money actually buy, and what will it ultimately cost me to repay?”
That distinction becomes especially important when APRs move above 30.00% or 40.00%.
A borrower receiving a US$11,699 loan at a high interest rate may enjoy substantial immediate purchasing power in a low-cost state, but the longer-term repayment burden can still be significant.
Achieve cautioned consumers against judging financing solely on availability.
“More Americans are turning to personal loans these days, and for good reason. They often come with lower rates than credit cards, fixed monthly payments, and a clear payoff date, which makes budgeting easier,” an Achieve spokesperson said.
“Consumers should research their options carefully and consider factors like their credit profile, income, and overall financial situation before applying.”
That caution is particularly relevant because advertised or average offered APRs do not necessarily represent the rate every borrower will receive. Individual loan pricing can depend heavily on credit history, income, debt obligations, loan size and lender underwriting.
Achieve’s ranking therefore says something broader about the geography of American household finance.
North Dakota and South Dakota do not lead simply because credit is available there. They lead because relatively low living costs allow borrowed dollars to stretch further while household incomes keep the size of a typical loan comparatively manageable.
Iowa strengthens that proposition with lower borrowing costs. By contrast, states such as Arkansas and Kansas demonstrate that strong purchasing power can coexist with expensive credit.
The real value of a personal loan cannot be judged from its principal amount alone. It sits at the intersection of local prices, household income and the interest charged for accessing the money.
And as personal loans become increasingly common across America, the state in which a borrower lives may determine almost as much about the usefulness of that US$11,699 as the number written on the loan agreement itself.
Source: Achieve.
